Putting craft beers on tap pulls margins up.
Today’s craft beer drinkers have some characteristics that should definitely interest you. They are increasing in number; they are young (more than half are in the 21–44-year-old bracket); more than three-quarters of them earn more than $50,000 a year; and almost half have a college degree. They are mostly male, though the number of women in the group is steadily increasing. Their average check is $16 more than a mainstream, “premium” beer drinker spends; and while both drinkers tip about 17 percent, the craft drinker is tipping on a higher base.
Sounds good, right? But keep in mind: The craft drinker’s first question to their server is usually, “What’s on tap?”
Drew Huerter is the chief brewer at Deep Ellum Brewing in Dallas, a brewery just over a year old, and he already knows how it works. “The people who want to spend money are going to be asking ‘What’s on your draft list, what’s new or special?’” he says, because they know that’s where the interesting stuff’s likely to be.
Don’t think that just because craft brands are small or local that they’re insignificant—craft brands are actually exploding, and taking serious share from established national brands.
“The largest 15 beer brands on-premise account for 61 percent of retail sales,” said Peter Reidhead, vice president of strategy at GuestMetrics. “This means the long ‘tail’ of nearly 3,400 smaller beer brands accounts for about 40 percent of sales in the on-premise space.”
That’s huge; and these brands skew much more towards draft.
Craft on Draft
Overall, draft accounts for about 10 percent of total beer sales nationally, but since the beginning of craft brewing, craft beer sales have represented an even higher percentage of draft sales.
“We started out selling only draft, 100 percent,” recalls Rich Doyle, co-founder of Harpoon, the large Boston-based craft brewer founded in 1986. “We’ve always focused on it; there’s always been a strong draft market in New England. I love draft beer; it’s really fresh, it tastes great.”
Is draft really that different? The folks at America’s oldest brewery, the booming D.G. Yuengling & Son of Pottsville, Pennsylvania, certainly think so. Like most brewers, they love draft.
“It provides an affordable and immediate way for a consumer to try your product,” says Lou Romano, the brewer’s director of marketing and wholesale development, “because when it’s served cold, clean, and fresh, it can be the greatest representation of your beer available.”
Does draft craft beer sell in fine restaurants, or just in specialty beer bars? That’s a question that’s largely been answered by the gastropub movement. If people want the private label Flemish red ale with duck breast salad and moules-frites at places like Monk’s Café in Philadelphia, or Russian River Consecration ale with house charcuterie and Dungeness crab and leek risotto at Higgins in Portland, Oregon, it’s clear that there’s an interest in fine beer to go with fine food.